Prime Minister Benjamin Netanyahu on Tuesday dismissed heavy criticism of Israel’s recent announcement of new housing construction in East Jerusalem and the West Bank, saying the root of the Israeli-Palestinian conflict “is not the settlements, it is the very existence of the State of Israel and the desire to wipe it off the face of the Earth.”

Speaking at a forum on public diplomacy held in Jerusalem, Netanyahu said that “we must constantly repeat that the root of the conflict is the very existence of the State of Israel, the refusal to recognize the State of Israel in any borders whatsoever.”

Palestinian Authority President Mahmoud Abbas, for his part, instructed his subordinates Tuesday to muster international support to halt “Israeli settlements in all of the Palestinian territories, particularly what is referred to as E1.”

“We cannot be silent on the matter of settlements by any means,” he added. “We will pursue this endangering matter with great attention in the coming days for if Israel continues to build, it indicates that it is not interested in arriving at peace.”

Earlier on Tuesday, a senior Palestinian official warned that Israel’s latest settlement plans would destroy any lingering hopes of setting up a Palestinian state next to Israel, as international anger over the planned construction snowballed.

Israel announced the plans in response to last week’s UN General Assembly upgrade, to nonmember observer state status, of “Palestine” in the West Bank, Gaza and east Jerusalem, lands Israel captured in 1967.

The plans include 3,000 more homes for Jews in the West Bank and east Jerusalem, as well as preparations for construction of the especially sensitive E1 project that would link Jerusalem to the large settlement of Ma’aleh Adumim to the east, potentially destroying the possibility of a contiguous Palestinian state in the West Bank. Israeli officials have stressed that the E1 announcement relates to a very preliminary planning stage.

Separately, Israel is moving forward with two major projects in Jewish neighborhoods of East Jerusalem. Israel would build more than 4,200 apartments in the two areas, Ramat Shlomo and Givat Hamatos.

The Ramat Shlomo project touched off a diplomatic crisis with the US in 2010 when the ministry gave it preliminary approval during a visit by Vice President Joe Biden.

Israeli settlement construction lies at the heart of a four-year breakdown in peace talks, and was a major factor behind the Palestinians’ UN statehood bid, the Palestinians said. Previous Israeli government peace offers, rejected by the Palestinians, have shown a readiness to dismantle the majority of the settlements, and to trade land in Israel, in “land swap” arrangements, in order to maintain major settlement blocs. Since 1967, half a million Israelis have settled in the West Bank and East Jerusalem.

The Palestinians say E1 and Givat Hamatos are particularly problematic because they would cut off east Jerusalem, the intended Palestinian capital, from the rest of the West Bank.

Israel’s plans for E1 and Givat Hamatos “will leave us with no peace process,” Saeb Erekat, a senior aide to Palestinian President Mahmoud Abbas, told The Associated Press.

He later told Israel TV that “it’s over” if these two areas are built.

“Don’t talk about peace, don’t talk about a two-state solution … talk about a one-state reality between the River Jordan and the Mediterranean,” Erekat said, referring to the land that the international community hopes will one day accommodate both Israel and a Palestinian state.

British Foreign Secretary William Hague sounded a similar warning Tuesday, telling Britain’s parliament that Israel’s building plans would make a Palestinian state alongside Israel “almost inconceivable.”

Israel has rebuffed the international criticism, which put it at odds with some of its strongest foreign allies, including Australia.

Foreign Minister Avigdor Lieberman said Tuesday that construction plans would move forward, particularly in east Jerusalem and nearby West Bank settlements. “Israel makes decisions according to its national interests, and not in order to punish, fight or confront,” he said.

The Palestinians, meanwhile, were debating their next moves in a meeting of senior officials chaired by Abbas at his government compound in the West Bank on Tuesday evening.

UN recognition could enable the Palestinians to gain access to the International Criminal Court and seek war crimes charges against Israel for construction of settlements on occupied lands.

Last week, before Israel’s announcement of the new settlement plans, Abbas said that he would not be turning to the ICC “unless we were attacked,” and Palestinian officials portrayed an appeal to the court as a step of last resort.

However, Abbas said Tuesday that “no one can keep quiet about the issue of settlement in E1,” adding that if Israel keeps building, “it definitely does not want to reach a peace agreement.”

Actual construction in E1 would be years away even if the planning process is pushed ahead now.

The Palestinian representative to the United Nations, Riyad Mansour, wrote to the UN chief and the heads of the Security Council and the General Assembly late Monday that Israel’s construction constitutes a war crime.

The letter made no mention of possible ICC action, which in any case would first require a series of steps by the Palestinians and the court.

A Palestinian case at the ICC could also expose Abbas’s main Palestinian rival, the Islamic militant Hamas, to possible war crimes charges for its indiscriminate rocket fire from Gaza on Israel.

Hanan Ashrawi, a senior PLO official, said the Palestinians were encouraged by the recent diplomatic sanctions against Israel, but that the international community must go further.

Among other steps, she said the European Union should reconsider its association agreement with Israel that grants the Jewish state considerable trade benefits. She said the EU should also take harsher measures against products from Israeli settlements.